Can You Get A Used Car Loan From A Credit Union With A Low Credit Score

Car loan interest rates at credit unions are normally lower than APR from banks regardless of your credit score.

While most banks have to answer to shareholders on Wall Street your community credit union does not. While banks like Regions and thrift deposits like New York Community Bank Corp are insured by the Federal Deposit Insurance Corp, credit unions deposits are insured by the National Credit Union Administration

Credit union has a cap of 18% on all loans interest rates. That means your car loan will never cost over 18 percent even with a very bad credit history. Because credit unions are community oriented you are more likely to have leverage in negotiating the interest rate on a car loan even if you have low credit score.

A $19,000 (principle + interest )car loan finance through a bank will cost you around $17,200 if that same loan was finance through a credit union.

The use of credit unions as a lender for car loans is growing. In 2010 Vehicle loans made up 29.1 percent of all credit union loans. In 2011 used vehicle loans expanded 3.43 percent during the year, and 0.2 percent during the fourth quarter.

Here is the latest quote from Pentagon Federal Credit Union for example

48 Mo Used Car 1.99 Good credit and membership required.
60 Mo Used Car 2.49 Good credit and membership required.
36 Mo Used Car 1.99 Good credit and membership required.

There are about 7,700 credit unions with at least one in about every city.

CUDL or Credit Union Direct Lending is a program between over 800 credit unions and about 6,500 car dealerships, providing credit union lending options for car dealerships selling new and used vehicles for consumers with credit union membership.

During the credit crisis, credit union made over $80 billion in low cost car loans including bad credit car loans during a time of high credit squeeze.

Credit unions are more flexible than banks and more likely to work with local residence. Credit unions offer car loans with an average term of 70 months.

Advantages and disadvantages of banks and credit unions